Ex-Im widebody aircraft exposure nearing 30%: GAO

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Widebody commercial aircraft made up 28% of the US Export-Import Bank’s (Ex-Im) financing portfolio at the end of March, finds the US Government Accountability Office (GAO).

In a review of the export credit agency’s aircraft lending activity, the agency finds that support for widebody aircraft generally increased from 2004 to 2012 before falling in 2013, in a report released on 9 July.

Ex-Im was exposed to $32 billion in widebody aircraft financing compared to just $16 billion in narrowbody aircraft financing at the end of March, the GAO says. Together the two aircraft categories make up 42% of the lender’s entire financial exposure.

The bank exclusively supports commercial aircraft deliveries from Boeing.

Ex-Im is under fire from Delta Air Lines, Hawaiian Airlines and the Air Line Pilots Association for its widebody aircraft loan guarantees to state-supported, credit worthy carriers abroad, which they allege cause negative economic consequences to them and their employees.

“The bank provides foreign airlines – many of which are owned by their host governments and can obtain financing on their own – with US taxpayer funded subsidies totalling as much as $20 million per aircraft,” says Atlanta-based Delta in a statement. “That subsidy puts our own airline industry at a competitive disadvantage and it’s why Delta believes it’s now time to end the bank’s practice of helping creditworthy, state-owned and -supported foreign carriers purchase wide-body aircraft at the expense of US airlines and American jobs.”

Airlines from India, South Korea and the United Arab Emirates are the largest users of widebody loan guarantees from Ex-Im with more than $3 billion in authorisations from 2004 to 2013, the GAO finds.

Air India, Emirates, Etihad Airways and Korean Air have all used Ex-Im guarantees for deliveries of Boeing aircraft.

All four of the carriers have been named in one or more of Delta’s four lawsuits pushing for reform of the bank since 2011.

Ex-Im thanks the GAO for the review and emphasises the fact that widebody aircraft support fell to only 20% of total authorisations in its 2013 fiscal year that ended on 30 September 2013, in a letter signed by chief risk officer Charles Hall.

“By 2013, a full 85% of Boeing and Airbus large commercial aircraft deliveries were not supported by either Ex-Im Bank or the European ECAs,” he says.

Congress is debating the renewal of Ex-Im’s charter, which expires on 30 September, currently. Support for the bank is split largely along partisan lines.

The GAO report comes at the request of senator Jon Tester for a review of Ex-Im’s aircraft financing activities.